That news didn’t do any good to the stock markets which gained a little at the open after a mild inflation report from the government. Stocks dropped more than 300 points at one point and eventually closed almost 200 points down, giving up all the gains of the week.

As stocks got pounded, commodities surged and spot gold broke the $1,000 mark for the first in history (BTW, oil also reached a record $110 a barrel)! It was just six months ago, when gold was around $750, the manager of Tocqueville Gold Fund (TGLDX), that fund that I own, predicted $1,000 gold. And now, here we are, $1,000 gold!

*Photo from Goldinvestingsource.com

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Yes, the commodities like gold, silver, oil, can still go up. Late last month, CALPers, California public employee retirement system, decided to boost its investment in commodities from $450 million last year to $7.5 billion in 2010. That’s an increase of 16 folds!

wbbgjr | Mar 15, 2008 at 3:36 pm

With the Federal Reserve attempting to bail-out the banks for their fraudulent behavior the past few years, inflation is going to be unbelievable in the next few years. The price of gold these days is just reflecting everyone realizing that the U.S. government is not interested in protecting the purchasing power of the Dollar.

ongrowthtrack: I agree that speculation plays a quite large part in gold’s rapid price gain. However, I don’t think we can just look at what happened in the early 80s and predict that gold will fall as hard as last time. The environment is different now from before. Investors, institutional and individual, are buy gold as a diversifier and to hedge against weakening dollar, and demands for gold remains strong. Sure, when the current
financial crisis is over, gold price could pull back, but I don’t feel it will enter an extended period of depression.

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